CFE – Law — Question 2

Frederick has multiple high-volume foreign bank accounts. The country he lives in requires him to report such accounts annually for tax purposes, but he regularly and intentionally fails to report his accounts in order to reduce the amount of taxes he must pay. Which of the following schemes has Frederick MOST LIKELY committed?

Answer options

• A. A tax credit evasion scheme
• B. An income and wealth tax evasion scheme
• C. An excise tax evasion scheme
• D. A value-added tax evasion scheme

Correct answer: B

Explanation

Frederick is most likely involved in an income and wealth tax evasion scheme because he is intentionally failing to report his foreign bank accounts to avoid paying taxes on his income. The other options, such as tax credit evasion, excise tax evasion, and value-added tax evasion, do not accurately describe his actions related to non-reporting of foreign accounts.